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Establish a price range
Now that you know how much you can qualify for, it’s time to decide how much you want to spend on the new home. These are not necessarily the same thing? Even though you can qualify for up to about 31% of your monthly gross income, that doesn’t mean you want to do that. It’s easy to be excited about a price range and pre-qualification, but before you head out to see homes, take a moment to understand how that monthly mortgage payment might affect your lifestyle.
What other expenses do you need to include in your monthly expenditures? Do you enjoy dining out on a regular basis or perhaps a round of Sunday golf? What about vacations and children sports clubs. There are many other demands on our income and it’s easy to feel “house poor” by delegating too much for the mortgage payment.
Lenders will help you consider all your loan options as well as give you an estimate about extra costs involved in buying a home such as homeowner’s association dues, property taxes and extra fees. It’s important to remember that these costs will vary depending on the home you find to buy: for instance, homeowner’s association fees can vary drastically from one community to another. As you review the information you receive from your lender, make sure you notice how much is budgeted for these extra fees.
The last step you should take is to consult your tax professional. Learn how a possible new purchase will affect your taxes. If you are a first time home buyer, you might find that even with a larger monthly payment, you actually save money due to the tax savings.
Home Buying Guide
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